Correlation Between Apple and Walker Dunlop

Can any of the company-specific risk be diversified away by investing in both Apple and Walker Dunlop at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Apple and Walker Dunlop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apple Inc and Walker Dunlop, you can compare the effects of market volatilities on Apple and Walker Dunlop and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Apple with a short position of Walker Dunlop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Walker Dunlop.

Diversification Opportunities for Apple and Walker Dunlop

0.4

Correlation Coefficient

Apple  Walker Dunlop

Very weak diversification

The 3 months correlation between Apple and Walker is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Walker Dunlop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walker Dunlop and Apple is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Apple Inc are associated (or correlated) with Walker Dunlop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walker Dunlop has no effect on the direction of Apple i.e., Apple and Walker Dunlop go up and down completely randomly.

Pair Corralation between Apple and Walker Dunlop

Given the investment horizon of 90 days Apple Inc is expected to generate 0.71 times more return on investment than Walker Dunlop. However, Apple Inc is 1.41 times less risky than Walker Dunlop. It trades about -0.01 of its potential returns per unit of risk. Walker Dunlop is currently generating about -0.02 per unit of risk. If you would invest  16,971  in Apple Inc on January 26, 2024 and sell it today you would lose (69.00) from holding Apple Inc or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Apple Inc  vs.  Walker Dunlop

Apple Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Walker Dunlop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Walker Dunlop is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Apple and Walker Dunlop

The main advantage of trading using opposite Apple and Walker Dunlop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Walker Dunlop can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Walker Dunlop will offset losses from the drop in Walker Dunlop's long position.

The idea behind Apple Inc and Walker Dunlop pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.